Ethereum software upgrade expected to ramp up energy efficiencies and investor interest
The Ethereum blockchain, the second-largest blockchain in the world by market cap, has undergone a significant software upgrade aimed at drastically lowering its energy consumption. The "merge" upgrade for Ethereum was reportedly successful, and early morning trading suggested high investor interest.
The upgrade is said to alter how transactions on the Ethereum blockchain take place as well as how ether tokens, the second-largest cryptocurrency after bitcoin, are developed. A cryptocurrency market rally appears to have been sparked by the successful transition to a new method of validating transactions that consumes over 99% less electricity. Ethereum increased by 2% to $1,640, while Bitcoin increased by 0.2% to reach US $20,298 within the last 24 hours.
As a result of the change, Ethereum will reportedly switch from its current "proof of work" system, which is said to rely on energy computers that validate transactions by solving difficult math problems, to a "proof of stake" system, in which users and businesses act as validators and stake ether as collateral in exchange for newly formed tokens. Alternatively stated, the Ethereum merger necessitated a complex network transition from the high energy consumption proof of work method of transaction validation to the relatively low energy consumption proof of stake method.
Furthermore, the upgrade, which developers claim will make Ethereum more secure and scalable, has reportedly been operating smoothly so far, with node validators acting as expected and adding new transactions to the blockchain's ledger. With the proof of stake consensus mechanism, a massive amount of computing power is no longer required to support transactions and the creation of new cryptocurrency units.
The central bank of Norway to develop a national digital currency using Ethereum
The Norges Bank has officially stated that the prototype infrastructure for Norway's central bank digital currency will be based on Ethereum technology. The central bank has reportedly reached a key milestone in its digital currency efforts by making the open-source code for the country's central bank digital currency (CBDC) sandbox available.
The Ethereum cryptocurrency system is anticipated to offer a fundamental infrastructure for the issuance, distribution and destruction of digital central bank money (also known as DSP), according to the Norges Bank, as well as to test crucial DSP features.
The announcement coincides with a recent report by the International Monetary Fund (IMF) indicating that ninety-seven countries, or more than half of all global central banks, were currently investigating or establishing CBDCs as of July 2022. According to the IMF and graph illustration 1 below, only two countries have fully launched CBDC projects to date: Nigeria and The Bahamas.
Graph Illustration 1: Global CBDC development in 2022. Source: IMF
The IMF announced this month that it was involved in a collaborative project involving an interoperable CBDC platform that would connect multiple global CBDCs and enable cross-border transactions.
Wio Bank PJSC officially launches UAE's first platform bank
Wio Bank PJSC has officially launched in the United Arab Emirates (UAE), becoming the region's first platform bank. Reports indicate that the bank’s position is consistent with the UAE's Digital Economy Strategy, strengthening its position as a regional and global hub for the digital economy over the next ten years and substantially increasing the contribution of digital economy to the nation’s GDP. The new bank is said to offer solutions in three main categories: banking-as-a-service (BaaS) options, embedded finance and digital banking applications.
Nearly one in five individual customers in the UAE currently has an account with a digital bank, but studies indicate that this may double in the coming years. However, SME digital banking is reportedly still in its infancy, and the majority of customers still open accounts at and conduct business with physical branches. Wio plans to offer a variety of digital banking applications for both individual and corporate customers, providing quick and simple access to banking services.
According to reports, the global embedded finance market is expected to grow by several hundreds of billions of dollars over the next ten years. Wio expects to reduce banking services through traditional banking channels as well as integrate tailored financial services with top digital players in the area, further advancing the digital economy.
Non-banking digital businesses can expect to integrate and white label financial services into their applications using BaaS. Wio plans to collaborate with digital businesses to provide ready-made and modular BaaS solutions, enabling them to provide banking products and services to their customers.
Mastercard joins forces with Copenhagen Fintech, empowering the Nordic fintech ecosystem
Copenhagen Fintech, a Denmark-based fintech linking start-ups, established businesses and organizations focused on innovative developments and technological opportunities, has announced a collaboration with Mastercard to further empower the expansive fintech industry.
According to reports, Mastercard has increased its footprint and workforce in Denmark in recent years, including the purchase of Nets' Corporate Services division and the open banking platform Aiia. Reports state that the main objective is to build a strong foundation and develop existing and new solutions for Denmark, the Nordics and the entire world.
With a shared focus on growth, knowledge sharing and innovation opportunities via multiple programs and services ranging from open banking to start-up programs, Mastercard and Copenhagen Fintech plan to establish a strong partnership that combines existing and new activities.
Mastercard's collaboration will provide consulting and development for start-ups in the Copenhagen Fintech Lab and Mastercard Lighthouse, a Nordic and Baltic fintech initiative program. Mastercard also supports new fintechs through its Start Path Open Banking program and is expected to sponsor and present at Nordic Fintech Week on 27-28 September in Copenhagen.
SWIFT to test blockchain technology for corporate action data
SWIFT is now collaborating with Symbiont Inc., a blockchain solutions fintech firm, to innovate the financial payments market. According to SWIFT, the collaboration is intended to improve communications in major corporate action events. Northern Trust, Citibank and Vanguard are also participating in the collaboration.
As of today, SWIFT has a presence in over two hundred countries and sends secure messages to over 11,000 businesses. SWIFT will reportedly use Assembly, Symbiont's technology platform, to automate corporate action workflow in its latest pilot blockchain project. Additionally, SWIFT plans to use the platform's smart contract functionality and other blockchain capabilities to create a network effect that will leverage their global network.
Symbiont's smart contract technology provides comparisons on data shared by participants. Furthermore, it highlights any discrepancies, contradictions or inconsistencies between custodians. According to reports, the SWIFT translator tool will be used to translate the corporate action data from SWIFT’s messages before uploading them to Symbiont's blockchain.
The blockchain pilot is currently in the development phase, and by the end of the month, a select group of participants are expected to test and provide feedback. SWIFT stated that it will expand it to cover more corporate events if it is successful.
Like this item? Get our Weekly Update newsletter. Subscribe today